Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. accounting
  3. exercise 14-4(algo) uncertain future cash flows [l

Exercise 14-4(Algo) Uncertain Future Cash Flows [LO14-4] Lukow Products is investigating the purchase...

70.2K

Verified Solution

Question

Accounting

Exercise 14-4(Algo) Uncertain Future Cash Flows [LO14-4]
Lukow Products is investigating the purchase of a piece of automated equipment that will save $110,000 each year in direct labor and
inventory carrying costs. This equipment costs $820,000 and is expected to have a 7-year useful life with no salvage value. The
company's required rate of return is 7% on all equipment purchases. Management anticipates that this equipment will provide
intangible benefits such as greater flexibility and higher-quality output that will result in additional future cash inflows.
Click here to view Exhibit 14B-1 and Exhibit 14B-2, to determine the appropriate discount factor(s) using table.
Required:
What is the net present value of the piece of equipment before considering its intangible benefits? (Enter negative amount with a
minus sign. Round your final answer to the nearest whole dollar amount.)
What minimum dollar value per year must be provided by the equipment's intangible benefits to justify the $820,000 investment?
(Do not round intermediate calculations. Round your answer to the nearest whole dollar amount.)
Net present value
Minimum dollar value
image

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students

Chemistry
1.2K views

What is meant with a ODE0D bleaching sequence?

Medical Sciences
1.2K views

________ is a condition characterized by high blood pressure and protein in the urine of a...

Biology
1.2K views

Draw a model explain how the boys and anyone with DMD get it and how...

Biology
1.2K views

What are the advantages and disadvantages of getting your protein from foods versus supplements

Geometry
1.2K views

10 The volume of the right rectangular prism is V 270 cm Write a quadratic...

Geometry
1.2K views

A property is bing transported through a fluidat steady state trough a content cros sectional...

Statistics
1.2K views

Use the data in the given table to fill in the missing coefficients Round your...

Accounting
1.2K views

REI sells snowboards. assume the following information relates to rei's purchases of snowboards during september...

Accounting
1.2K views

Sanchez & Ryan, Inc, sells a single product. This year, 20,000 units were sold resulting...

Accounting
1.2K views

B Corp issued 6 % bonds dated January 1 with a face amount of $20,000,000...

Finance
1.2K views

You have S560 in an account which pays 4.1% compounded annually. How many additional dollars...

Accounting
1.2K views

Required a. Reconstruct Gibson's income statement, assuming that it serves 174 customers when it...